Global minimum corporate tax expected to prevent transfer pricing
The application of global minimum corporate tax from the beginning of 2024 is expected to be an effective tool to prevent transfer pricing and tax evasion, thus helping to increase State revenue through additional tax collection.
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Vu Chi Hung, Deputy General Director of the Ministry of Finance’s General Department of Taxation, affirmed that the ministry and taxation sector have always paid attention to fighting transfer pricing to prevent tax losses.
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| Corporate tax expected to prevent transfer pricing by Global Minimum. |
Luu Duc Huy, Director of the Tax Policy Department under the General Department of Taxation, said the application of the global minimum corporate tax is also to promote the nation's global integration and reform the taxation system up to international practices by amending corporate tax policies and relevant laws.
It is also expected to minimize tax avoidance, tax evasion, transfer pricing, and profit shifting, he said.
The issuance of preferential corporate tax policies by countries to attract foreign investments has made these phenomena more complicated, potentially leading to situations where businesses take advantage of opportunities to shift profits from high-tax countries to lower-tax nations, thereby resulting in tax revenue losses, Huy elaborated.
According to the official, the application of the global minimum corporate tax will create a level ground for taxation in all countries, thereby avoiding tax competition among nations and minimizing the occurrence of transfer pricing and profit shifting. This will help maintain a stable source of tax revenue.
Huy added that the General Department of Taxation advised the Ministry of Finance to work closely with ministries, agencies, and the NA’s Committee for Finance and Budget to hold seminars and conferences at home and abroad, as well as study solutions to report to the Ministry of Finance, Government and legislature for approval.
It also proposed enforcing regulations on qualified domestic minimum top-up tax and income inclusion rules to protect national interests when applying the global minimum corporate tax.
(Source: VNA)
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